China ’s irresistible export power is not unstoppable, just ask Lawrence Yan, the CEO of Woodworth Wood Furniture Co., Ltd. (Dongguan). His factory in Dongguan used to export 400 containers to the United States every month, but now only 60 containers.
This is what the American competitors, who are exhausted and desperate, want to happen. In January 2005, the US Department of Commerce imposed import tariffs on beds, bedside tables and related products produced in China. However, what happened next did not develop as expected by the United States: Yan opened a factory in Vietnam and began exporting products from there to the United States. Others do the same. Now, he is building a large factory in Indonesia, hoping to export more products to the United States.
At present, about 70% of American bed and related products are imported. However, before Washington intervened and tried to protect the domestic furniture industry from "dumping" of Chinese products, the proportion was 58%. Trade concerns have triggered calls for Washington to take tougher action to protect American employment. Did the tariffs work? As far as furniture is concerned, this has obviously slowed down the operation of Chinese export machines. Before the tariffs took effect in 2004, China exported bedroom furniture worth US $ 1.2 billion to the United States, compared with 691 million last year. But at this stage, imports from Vietnam, where wage levels and production costs are even lower than those of China, have exploded, increasing from US $ 151 million to 931 million. At the same time, the number of jobs lost in the United States is accelerating. Now Americans engaged in the production of bedroom furniture are less than half of those before the tariff.
Some small manufacturers in the United States have joined together to set up a legal trade committee for American furniture manufacturers and asked Washington to "save them to death." With the help of the union, they submitted a request accusing Chinese competitors of dumping furniture into the US market. After a long debate, the US Department of Commerce ruled that China dumped at "low prices" and began to impose tariffs on Chinese exporters. Furniture manufacturers in Dongguan held a meeting to discuss countermeasures. They set up a fund to support lobbying efforts in Washington and began hiring lawyers to sue. Yan has another idea. He said: "I told them that I will build a factory in Vietnam." He explained that this would not only allow his company to avoid US tariffs, but also get rid of China's rising production costs.
Vietnam has now replaced China as the main source of furniture sales in the United States, largely thanks to the transfer of factories in Dongguan and elsewhere to Vietnam. Travez Bell, a US furniture buyer who has moved from Virginia to Dongguan, dismissed claims that anti-dumping clauses have helped the US domestic industry. "The only thing that changed is where did you eat dinner," he said, "it used to be in Dongguan, but now it's in Ho Chi Minh City."
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